OTP good stories and horror stories

Genia

Genia

Hello everyone,

Would anyone mind to share your (or your friends) good or bad experiences with OTP properties.

It would be interesting to know what went well, and what didn't. Which year was it and what location.

I will share here the story of one of my friends.

2006, South Melbourne. The apartment was build to specs, high quality, low body corporate.

2012, St Kilda. The project was delayed, apartment was build without a promised balcony, poor quality of the fittings causing numerous maintenance requests from tenant. Body corporate is too expensive around 4.5K + boiler fee.

He also purchased an OTP apartment in Camberwell a year ago, construction will commence in September, but he is now wondering, if he should release it, before it is too late.
 
My good story with OTP is that I've never bought one.

I prefer to buy or develop property that I can affect a change in the value, set timeframes and undertake a feaso beforehand to minimise risk and maximise result.
 
They're good to flip in a rising market but can take so long to build in a rising market that you miss the peak. Make sure you buy it in a $2 company!
 
cadence said:
Why buy it in $2company?
Click to expand...

So you can afford to lose everything if the deal goes bad: typically finance falling through due to valuation lower than purchase price.

I guess the trick is to get the vendor to sell to the company without requiring guarantees from the directors.
 
Genia,

The site is pepered with OTP stories (good and bad - but mostly bad - this just could be because good ones don't make an interesting story)

Google: somersoft.com otp

The Y-man
 
Thank you all,

Yes I have tried to research this forum for OTP topics, but they were mostly questions about OTPs. :rolleyes:
 
Bought off the plan in 2007 and settled in 2009.

Don't know whether to be happy or not but to give you a full picture:

1. It has gone up at least $200K since purchase.
2. Rental return is $680 per week- purchase price is $500K
3. High strata due to building issues- and extra in special levies due to ongoing legal battle against the developer.


So I am happy that it has gone up, it's well located so hardly any vacancy, but at the same time, high strata fees due to building maintenance issues. But most (60-70% of the spent money) will hopefully be recovered when we enter mediation or legal proceeding. Will be happy if we can recover 100% of what we spent. And hopefully the strata fees will go down after the building issues are rectified to its original level.
 
I think overall buying established will always perform better. buying established will get you something bigger, smaller number of units at a lower price.
 
Bought OTP townhouse in late 2003 for $140,500.

Value on completion 15 mths later $360,000.

Still got it returning $420/wk. Decent BC fees still.

Remembering that was boom time in Mackay.


pinkboy
 
Not All OTP are bad, you can make lots of money with very little deposit.

You just have to be extra careful when purchasing OTP. Do some extensive research on the area and do a price comparison with the other OTP and some that are just recently completed (See how they're valued).

I purchased 2 OTP and have Make Very good healthy Growth before even the project is completed.
 
windyzz said:
Not All OTP are bad, you can make lots of money with very little deposit.

You just have to be extra careful when purchasing OTP. Do some extensive research on the area and do a price comparison with the other OTP and some that are just recently completed (See how they're valued).

I purchased 2 OTP and have Make Very good healthy Growth before even the project is completed.
Click to expand...

No you'll only make money once it's completed and the values stand market testing.
 
Tony3008 said:
No you'll only make money once it's completed and the values stand market testing.
Click to expand...

That's Correct! but when you're seeing that every established property in your area one has been advertised and sold for ~100k more than what you payed. You know that you'll be making some profit on settlement
 
Wow, good stories, guys. Thank you so much pinkboy and Meisterin.

I wish I was in Australia at 2003. :cool: *just kidding*

So really, whilst there are some not so major problems and annoyances, there is nothing of disastrous proportion... Plus saving on stamp duty and depreciation write-off.

Although, seeing many apartment/terrace/townhouse building sites all around in Melbourne, I feel, like very soon there will be oversupply.
 
Has anyone bought from a CBRE project?

Just want to know if anyone has problems with their construction work after completion?

I researched before buying so was confident but jus want to see if anyone has other experiences with their work.
 
To make good growth timing the market cycle in OTP is the secrect. If the price was bumped up at sale the 6-7 o clock would make good gain at 12 o clock.
I have potentially made growth about $120,000 and building yet to complete end of the year. Someone put their unit up for sale in the same block yet to be completed and am watching if it gets sold at the asking price.
 
OTP has been covered in great depth in many posts. My summary of them outlined in pros and cons are:

Pros
- if purchased in a rising market you can make big gains with little money down.
- small initial deposit
- very little stamp duty, additional benefits to FHO.
- High depreciation
- Easier to rent (new and usually in more desireable suburbs)

Cons
- Sold at inflated prices
- if at settlement the value does not come in then you are left short and must somehow come up with the difference.
- cannot manufacture any growth (no renos, subdivision, development.etc)
- body corporate fees (this is just apartments in general but still a negative)
- opportunity costs (money tied into a development which sometimes gets delayed years).
- Dogey developers/builders (due diligence can avoid this being an issue)
 
2am said:
To make good growth timing the market cycle in OTP is the secrect. If the price was bumped up at sale the 6-7 o clock would make good gain at 12 o clock.
I have potentially made growth about $120,000 and building yet to complete end of the year. Someone put their unit up for sale in the same block yet to be completed and am watching if it gets sold at the asking price.
Click to expand...

Congrats and well said! I believed i have potentially made growth around 100 on both of my OTP properties too!
 
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